U.S. stocks moved lower on Monday as a roughly 6% rise in front-month Brent crude weighed on investor sentiment, and the Strait of Hormuz continued to limit crude exports. The selloff came even as some macro and corporate metrics showed resilience.
Goldman Sachs analysts reported that oil exports transiting the Strait of Hormuz had fallen to only 4% of normal levels, an acute supply bottleneck highlighted by Yulia Grigsby at the firm. Front-month Brent was trading nearly $25 per barrel higher than Goldman Sachs' fourth-quarter 2026 forecast of $90 per barrel, underscoring how far spot prices have moved above the bank's projection as efforts to clear the chokepoint have not succeeded.
Despite the rise in energy costs, several indicators of activity and corporate performance remain solid. March factory orders rose 1.5%, and first-quarter corporate earnings broadly exceeded expectations, with almost two-thirds of companies reporting results above forecasts. Goldman Sachs analyst Ben Snider observed that earnings-per-share growth surpassed what the firm described as a high bar of expectations.
On the manufacturing front, the ISM sentiment index stood at 52.7, up from 52.4 on March 2 prior to the onset of the conflict affecting flows through the Strait. Goldman Sachs' tracker for second-quarter 2026 GDP growth held steady at a quarter-over-quarter annualized rate of 1.7%, indicating that the firm does not see an immediate downturn in growth momentum.
Goldman Sachs drew a comparison between the current supply-driven squeeze in energy markets and the 1973 oil embargo, while noting important distinctions in today's global energy landscape. The firm said this episode differs from the demand-led price pressures experienced during the pandemic recovery period.
Higher fuel prices, the analysts warned, may curtail consumer spending on discretionary categories such as dining out and travel. They also said elevated energy costs have the potential to raise input prices for goods that rely on oil-based materials and logistics, citing plastics and freight as examples.
Separately, Goldman analysts identified near-term inflationary pressure linked to artificial intelligence adoption. Manuel Abecasis pointed to shortages in memory components that affect smartphones and personal computers, upward pressure on software pricing, and additional electricity demand from datacenter operations. The firm expects that over time AI-related productivity gains will be disinflationary once they are more widely realized.
In sum, the combination of a sharp oil-price move driven by constrained flows through the Strait of Hormuz and ongoing economic and corporate resilience creates a mixed backdrop for markets, with energy-driven cost pressures a key source of near-term uncertainty.